"You report the gross amount that you paid. If the contractor received less than the gross amount due to service charges or other fees, they will deduct that as an expense on their tax return."
Hey, I have a question regarding this. We have an inner group in our company. Two of our managers have their own team. The payroll of their team is included in our regular payroll and I have been recording these payments as advances to the two managers (or dues). The agreement is we will deduct the payroll expenses from the commission payments of the managers. How do we handle the 1099s of these two managers and their team? which one is better (1) issuing 1099s to both team members and the managers (at the net) or (2)issuing the 1099s at gross to the managers and have them issue 1099s to their team members?
